Alice N. Sanders
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The case for going on ‘global breakout watch’ — and still betting on U.S. stocks

While non-U.S. stocks look promising, investors shouldn’t ditch American equities as they go abroad, according to one analyst.

“We often hear that the opportunity is overseas based on attractive valuations,” said Oppenheimer & Co. technical analyst Ari Wald in a weekend note.

“We believe that if this view proves correct, then taking a cautious stance on the U.S. based on elevated multiples is misguided advice, because a bet on the world is often a bet on the U.S.”

History suggests the S&P 500 SPX, +0.13%   — the main U.S. stock gauge — won’t stumble while Europe soars, Wald said.

“The S&P has gained in 88% of all rolling 52-week periods since 1987 when Europe outperforms vs. the S&P,” he wrote.

The picture overseas is indeed encouraging, the analyst added. The number of global markets rallying to new all-time highs is growing, Wald said as he offered the graphic below.

Japan, Germany, Canada, South Korea...

Wald also provided a second graphic, with both titled “Global Breakout Watch.” The foreign stock benchmarks he highlighted include Germany’s DAX DAX, +0.17% , Japan’s NIK, +1.73%  and Canada’s S&P/TSX GSPTSE, +0.45%  .

U.K., India, Hong Kong, France...

Many strategists have beaten the drum this year for non-U.S. stocks, saying foreign equities look like bargains while the American market’s rally seems overdone.

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